Experts: Use 401(k) Plans to Expand Client Services Suite

Las Vegas (May 5, 2004) — While 401(k) plans are overlooked by financial advisors in terms of client services, investing a little time up front in this $2 trillion industry will pay off over the long haul, a pair of 401(k) experts told roughly 800 attendees at Terra Securities’ national convention, here.

“They’re what you call a get-rich-slow scheme,” explained Brian Cooper, director of business development retirement services at Principal Financial, one of the country’s largest 401(k) plan administrators with some 30,000 plans under its aegis. “But you need people to participate. Who cares if your plan has the best funds in each asset class if no one’s participating?”

Cooper said that by 2014, there will be more assets leaving qualified plans than coming in, due to the number of Baby Boomers preparing for retirement.

He urged the planners in attendance to seek plan sponsors who offer personalized service, give clients timely and accurate reports, provide investment education and have a multi-fund option platform.

“Plan participants are looking for educational tools, a strong brand name and easy-to-use access online,” Cooper said. “At Principal, we invest $250 million annually just in retirement plan technology.”

Cooper urged session attendees to trawl for potential clients who are involved with 401(k) providers that are either having systems issues, or receiving bad press, as they are the ones most likely to change.

To illustrate the growth of 401(k) plans, Cooper told attendees that the first 401(k) plan he wrote in 1986 had three investment options.

“And until the recent uptick in the stock market, I used to tell people I was in the 201(k) business.”

Ken Weida, senior vice president at BenefitStreet, a company specializing in 401(k) plans for smaller companies, said that there are 5.7 million firms in the U.S. with under 500 employees, and those clients want and need good retirement plans much like their larger counterparts.

“Smaller companies now are the ones that need the good benefit plans,” Weida explained. “Many of the larger companies are now either downsizing or outsourcing jobs.”

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